Wednesday, June 4, 2014

How To Spot A Chinese Domain Name Scam

By Ryan Dube
If I offered you a way to protect your car from ever getting stolen, or your house from ever getting broken into, would you pay me for it? Lots of people would — for many people, their brand is just as important as anything else. This is why Chinese domain name scams have become so popular, and so successful.
Chinese domain name scams are rampant. In a little bit, I’ll explain exactly what these scams are, but first it’s more important to understand what started them. The effort to get businesses to register for Asian domains to “protect the brand” has been ongoing for many years. It appears this became a phenomenon as early as 2006. But it has accelerated within the past year, after the CNNIC registry announced that the Chinese .CN domains were public.
While previously (since September 3rd, 2012) , you had to submit identifying documents and other personal information to register a Chinese domain; as of July 9th, 2013, those rules changed. You can now register a .CN domain as easily as any other domain, regardless of where in the world you do business. This means there’s a bit of a CN domain registration gold rush at the moment.
After these policy changes, the effort to get businesses outside of China to register .CN domain names took on a life all its own. Today, there is a massive proliferation of entities in the Asia region who are contacting unsuspecting small and large businesses across the world to register Asian domains in order to “protect the brand”. This scam targets business owners who are uneducated regarding the domain name registration process.

How the Chinese Domain Name Scam Works

For years, small and large businesses around the world occasionally received emails from individuals reportedly working for a Chinese registrar service, offering a “brand protection” package.  The package includes registering a long list of Asia-related domains at a fairly hefty cost per domain.
It is a practice that marketers call “slamming”. Essentially the technique involves some collection of the following tactics:
  • Informing you that some third-party company is trying to register your brand within the Asian domain realm.
  • Advising you that as a courtesy, the registrar is seeking your “permission” for the third-party to register using your brand name.
  • Providing you with first-option to register the Asian domains under your own brand.
  • Good cop/bad cop games between the fictional registrar and the alleged 3rd party attempting to register your branded domain.
  • Registrations can reportedly take place with a third party email account, so you don’t have direct access to the domains.
  • Prices are either abnormally high, limited to 5 to 10 year minimum registrations, or both.
The practice of slamming has increased within the last few months, and should increase even more considering the fact these domains are now accessible to anyone.

An Email from Nicholas Lee

In early 2014, Angela shared her own experience almost falling for a Western Union Transfer scam.  My experience with the Chinese domain name scam was similar. I was made aware of the existence of this scam on April 21st when an individual by the name of Nicholas Lee, writing under an email address with the domain and a matching footer logo contacted me.
chinese domain1a   How To Spot A Chinese Domain Name Scam

The email advised me that a company by the name of RANTRANCE LTD was attempting to register TopSecretWriters under several top-level Asian domains like CN and HK.
“Dear CEO/Principal,
This is Nicholas Lee—Senior Consultant of domain name registration and solution center in China. Here I have something to confirm with you. We formally received an application on April 21, 2014. that a company claimed “RANTRANCE LTD” were applying to register “topsecretwriters” as their Network Brand and some “topsecretwriters” Asian countries top-level domain names(in/hk/tw/etc) and China (CN) domain names through our firm.”
A quick google search turned up a guy named Christopher Hofman Laursen at the European Domain Centre.  Chris has been running a legitimate online brand management company with his business partner Nikolaj Borge since 2003.  Chris has been onto this Chinese domain name scam since 2013, when his clients first started reporting getting contacted by these Chinese businesses. Chris wrote a series of articles on his site about his effort to collect the names and companies associated with this scam. I made a note of Chris’ contact information, and then continued reading the email from Nicholas Lee.
“Now we are handling this registration, and after our initial checking, we found the name were similar to your company’s, so we need to check with you whether your company has authorized that company to register these names. If you authorized this, we would finish the registration at once. If you did not authorize, please let us know within 7 workdays, so that we could handle this issue better. After the deadline we will unconditionally finish the registration for “RANTRANCE LTD”. Looking forward to your prompt reply.
(This is a very important case, so please transfer this email to your CEO or Principal. Thanks a lot.)
Best Regards,
Nicholas Lee
Senior Consultant Manager”
The website looked like some kind of semi-legitimate domain registry located in China, and while the originating IP in the email header did not resolve to any such company, the location of the IP did resolve to a location near Nanchang China.
chinese domain1b   How To Spot A Chinese Domain Name Scam

While I wasn’t convinced there was any such imminent threat of some company named “RANTRANCE LTD” registering my domain in Asia, I was intrigued by the idea that such an easily exposed scam would be delivered to my doorstep. The following is a brief outline of the path of this investigation.

Exposing the Chinese Domain Name Scam

Jean-Francois Poussard of KeepAlart Online Brand Monitoring published a list of companies that have sent fraudulent emails like the above to its clients. One of those is NaSTechnology Information Center, a variant of the “Naas IT Company” Nicholas was reportedly from.
I responded to Nicholas and told him simply that I did not approve of some other company registering my brand under those domains. Nicholas responded that in that case, I should register all of the names.
“If your company consider these names of importance to your company’s business or interest, I suggest that your company register these names first so as to avoid confusion or speculation.”
To see how far I could push Nicholas into incriminating himself, I decided to play the part of a dumb, yet wary business owner. I pretended to be very concerned about this other company stealing my domain, but asked some pointed questions to see how Nicholas would handle it.
I would rather this other company not steal our domain name for those domains, but I would like to know how much registering those will cost.
Also, RANTRANCE LTD does not show up anywhere on Google and I can’t find who the contact person is for the company. I would like to know why they are trying to register our brand for those domains.
Thanks for any further information you can provide.
Nicholas played the part of a helpful third-party. Notice, he did not provide any contact information or anything that would prove RANTRANCE LTD is even a real company. Instead, he focused only on my second concern as to “why”, and provided me with his own speculation regarding this mysterious entity that wants to steal my brand.
Thanks for your confirmation, As for why RANTRANCE LTD want to use your brand and domains in China and Asia, according to our experience, there are following two points:
1.RANTRANCE LTD is a domain names grabber. they want to register these names before you and sell back to you to gain profits. 
2. your competitor let RANTRANCE LTD to register your domain names, let your customers feel confusion.
Here’s where things got serious. Nicholas then sent the price list that totaled how much it would cost for me to “protect the domain”.
chinese domain1c   How To Spot A Chinese Domain Name Scam

When asked why I couldn’t just go ahead and register the domain myself through my own registrar, Nicholas advised that the process is much easier by going direct through his Chinese company.
“Since the management for domains such as CN?HK is very strict, many overseas service providers can not finish registration, so it is the best to register through us.”
The deal appears to be that it’s possible to protect the brand for $700 per year for a minimum of 5 years – a grand total of $3500. Then there’s some kind of strange “network brand” fee of $220 per year for 5 years – a grand total of $1100 on top of the hefty $3500.  Brilliant deal, huh?
Notice that Nicholas was also requesting detailed personal information like a mailing address, as well as mobile and private phone numbers, as part of the “Dispute Application Form”.
chinese domain1d   How To Spot A Chinese Domain Name Scam

So far, the whole deal appeared like a legitimate domain registration business (albeit with a virtually unknown company), at enormously trumped up rates.

Getting Aggressive – Delay Tactics

To get a better deal for how this whole game would play out for someone who would actually send in a check for $4600, I again spoke with Chris Laursen of the European Domain Centre. After reviewing the email exchange with Nicholas, Chris explained how the scam operates as follows.
Hi Ryan
You can call it a scam or a non ethical approach, but here are the facts:
They claim there is a 3rd party interested in your domain names – LIE
The “3rd party” contacts you from a Hotmail address to claim the domains – LIE
You delay your decision, they become aggressive on email and phone – NON ETHICAL
You will pay for a 5 year registration at a premium price, where they will register for 1 year, and (probably) renew every year – NON ETHICAL / SCAM
They will charge you USD 220 for “brand protection” – SCAM
Victims prefer to be anonymous. I put an example on the web page of someone paying USD 1.475, but I doubt that she wants to be interviewed. The examples of registrations I have seen, is where the registrant email is the scammer’s gmail giving them full control of the domain – and they register for the minimum period without any guarantee that it will be renewed.
This is the crux of the situation for anyone interested in owning a CN or any other Asia domain. You want full control of the domain so you can set the DNS records as needed, and so you can renew the domain whenever you wish.
Even if the offer in these cases involves an actual registration, you are essentially overpaying for the domain registration by a factor of 2 to 3 times the regular price. You will also not have direct control over the domains, assuming they actually get registered.
To see if Chris’ claim of aggressive tactics was true, I decided to delay and evade Nicholas to see how long he would wait before stepping up his efforts.  Four days after his last contact, Nicholas sent another.
“There is a long time for this case. But we did not receive your dispute application form until now. If you want to dispute and register these, pls fill in and return the dispute application form before 6:00 p.m. April 29, 2014. and then we can help you with protecting these domain names in time. If out of the date, we will pass the registration of the company, Thanks for your understanding.”
Through broken English, the threat was clear. Take too long to send in payment and register, and this other company’s registration would be processed immediately, as of April 29th. As a stall tactic, and to check if it would truly be impossible to work him down from the 5 year minimum to something more reasonable, I made the following offer.
Planning to send to you shortly, but I was wondering if I can choose only one or two of the domains rather than all of them. And can I register for 1-2 years rather than 5?
Nicholas’ response made it clear that he had no interest in playing nice. If the premium domains of CN or HK were desired, the only option was to pay those registration fees, plus the erroneous $220 per year “Network Brand” fee.
You can choose the domains you need, but if you choose to register CN or HK, you must register the Network Brand. As for other domains, there is no restriction.
As for the registration period, the minimum registration period for the dispute domain is 5 years, we have no option of 1-2 years, hope you can understand. If no question, pls fill in the form and return. Thanks.
The moment of truth has arrived. I waited for the 29th to arrive, and right on cue, received another email from Nicholas Lee.
Dear Ryan Dube,
Why haven’t returned the form? I’m waiting for. Today is the deadline, pls return asap. Thanks!
Best Regards,
Nicholas Lee
I did not respond, and waited for further aggressive tactics, instead, Nicholas warned that time was up, and that his company had already moved forward with registering the domains to RANTRANCE LTD.
I had divert this case to our register department already.Now you guys understood the policy of Domain name dispute and registration very clear. Due to we have not yet receive your Application Form in time.According to the policy of Dispute we see you give up the priority of Domain registration.That we just can pass through RANTRANCE LTD’s registration.RANTRANCE LTD will be the sole owner of those Domains since than.
That line is worth repeating: “RANTRANCE LTD will be the sole owner of those Domains since than”.
In other words – registration completed. This fictional company now owns the branded domains listed. Or do they?

Exposing the Chinese Domain Name Scam

That one line was perfect, because it was a black and white claim that the Asian domains were registered by someone else. This is a claim that’s easy enough to prove as a lie. All I had to do was go ahead and register the domains legitimately. However, before doing this, I waited about a week to make sure whatever alleged registration Nicholas processed had actually gone through, then I moved forward with the plan.
First, to find legitimate registrars in China, you should start with the CNNIC, the only organization approved by ICANN to register Asia-Pacific domain names.  A popular service based out of Hong Kong that’s listed there is 101Domain. That’s a good option. I actually went with since it’s one that I’d heard of before and is actually registered in the ICANN registry database Searching for my domainand looking up the prices for .hk and .cn domains was very revealing.
chinese domain2b   How To Spot A Chinese Domain Name Scam

As you can see, a single  year for .cn is a paltry $7.50. Registering .hk is only moderately more expensive. The price Nicholas had sent was about three times higher.
More importantly, notice that NiceNic did not identify these domains as already being registered by anyone. Submitting registration for these top level CN and HK domains was a breeze, and within barely two days I had received confirmation that I was the proud owner of shiny new top-level Asia domains for my brand.
chinese domain4   How To Spot A Chinese Domain Name Scam

With access to the Name Servers for the domain, it was a simple process to point those to my own website, and then redirect the .cn domain to the main blog page.
chinese domain7   How To Spot A Chinese Domain Name Scam

Having successfully completed this last stage of the investigation, evidence was in hand to expose the lies told by Nicholas and other Chinese domain scam artistslike him. However, after contacting Nicholas and providing him with this evidence, there was no response.
A week later, the website that formerly looked like a legitimate China registrar site had been taken down and now all that remained was a new domain landing page.
chinese domain8   How To Spot A Chinese Domain Name Scam

It is clear that this fraud is terribly deceptive. It’s not any different from ticket-scalping. The idea is that victims need to be unaware of just how simple it is to register any domain name in the world. The service may actually be legitimate enough — the person or organization may be willing to actually register the domains for you, but in the process you’re paying 200 to 300% higher rates than you normally would if you did it yourself, and you may even not be the full legal owner, or have full control of the name servers for those domains.

The moral of this story is, if you receive an email from anyone claiming that your brand is at risk in Asia, the question you should ask yourself is whether that really matters to you if people visit a .cn or .hk website of the same name and visit some other site. The second thing you should do is tell yourself that the threat probably isn’t real. And finally, if you do care about this – by all means register your Asian domains, but do it through a well-known, legitimate registrar that’s listed with ICANN, not through some random person who just emailed you.
Have you ever been contacted by one of these domain name scam artists? Do you own the Asian domain for your brand? If so, how did you go about registering it? Share your own experiences and insights in the comments section below.

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